Short Takes: April 19, 2013

Microsoft watchers were eagerly awaiting word of Windows 8 license sales in yesterday’s Microsoft earnings release, either in the initial release or the post-release conference call. But despite flat earnings for the Windows division (excluding the recognition of pre-release upgrade sales), which is unexpectedly good news given how the PC industry is going, no word came. Historically—meaning, back to October 2009—Microsoft has sold a suspiciously even 20 million Windows licenses per month, and the first two months of Windows 8 sales basically mapped to that figure. But it’s been a full quarter since Microsoft announced the last sales figure (60 million units, January 2013) and, well, inquiring minds want to know. My guess is that the PC downturn is going to eventually catch up with Microsoft and that the company will have to eventually release license sales figures that show a cooling off. Maybe we’ll find out at TechEd 2013? Related: "PC Sales Tank Again in Q1 2013"

Microsoft Confirms Smaller Devices Are on the Way, but Not from Microsoft

I exclusively reported that Microsoft was working on an 8" Surface tablet, and more recently The Wall Street Journal claimed the firm would release a 7" Surface. Microsoft didn’t confirm either of these reports during its earnings conference call. But it did say it was working with partners to deliver “small devices powered by Windows” in the coming holiday selling season. But we already knew smaller devices were coming. Why all the secrecy, Microsoft? Related: "Surface Pro vs. Surface RT: An Honest Comparison"

Yes, Virginia, Microsoft Is Bringing the Start Button Back to Windows 8

And it’s going to let you boot to the desktop, bypassing the loathed new Start screen, too. I’ve confirmed these rumors with my own sources, as has my Windows Weekly co-host Mary Jo Foley, so I think we can move this one into the “fact” category, though of course details about how these changes will be implemented remain foggy. I do find it interesting that Microsoft CFO Peter Klein, while not explicitly acknowledging the changes, did oddly admit that the company update to Windows 8—called Windows 8.1 and code-named “Blue”—will include changes guided by “customer feedback.” I’m of two minds regarding this news. On the one hand, I’m glad Microsoft is finally listening to customers, many of whom have been very clear that Windows 8 as currently implemented isn't hugely interesting to them because of its too-radical design change. But on the other hand, what the heck, Microsoft? What took so damned long? The past six years—the Sinofsky regime, basically—are most obviously marked (to me, at least) by the Windows division’s abject disinterest in customer feedback. No, not disinterest. Disdain. And I really do hope that’s changing. This is a black mark that the company, and Windows, will find it hard to recover from.

Google Sells Ads, Delivers Solid Financial Results

Microsoft wasn’t the only tech-related company to deliver better-than-expected quarterly financial results this week: Online advertising giant Google reported profits of $3.35 billion on $12.95 billion in revenues, gains of 16 percent and 22 percent, respectively, year-over-year. And for those who still bristle when I describe this firm as what it really is, make no mistake: The conversation around its quarterly earnings is all about advertising dollars. The average price of Google ads per click dropped 4 percent in the quarter, compared with an 8 percent drop in the previous quarter. But the number of ad clicks rose 20 percent, helping offset any drop-off. Ad “conversions” apparently remained pretty stable. Any of that sound like technology, or some cloud service thing? No? No. And go read the press release yourself. Not a lot in there about Android, Google Apps, or any other product. In fact, those terms don’t appear even once. It’s all about ads. (OK, “Motorola Mobility” is in there. That unit posted an operating loss.)

Wall Street Finally Turns Its Back on Apple

One question I often pose to the Apple acolytes is this: When was the last time the company released a truly innovative product? If you’re being honest, that time was mid-2007, when Apple shipped the first iPhone. Everything it’s done since then has been entirely evolutionary in nature and designed to extend its iOS-based ecosystem to new form factors, new apps, and new services. Smart, yes. Successful, obviously. But not innovative. Not in the slightest. So as Apple’s stock price has rocketed into the stratosphere during this same post-2007 time period, I’ve often been amazed to see mainstream commentators so routinely use the word “innovative” when describing Apple, as if the company had some never-ending bucket of exciting new products to release on a regular basis. Increasingly, however, the world is waking up to the lie of this belief. And although some are still feebly cheering on expected future TVs and smart watches—hooray?—many more are finally waking up. And now that includes Wall Street: Apple’s stock price has been on the wrong end of the rollercoaster drop for the past several months now, falling 44 percent since September from unworldly levels (over $700, somehow) to simply stratospheric levels. (That drop wiped out an incredible $290 billion in value.) At roughly $400 a share, Apple is still in rarefied company. But there is only one way to describe people’s very misguided views of Apple and its products over the past few years. And that’s irrational exuberance.

Discuss this Article 15

Regarding Windows 8: Before it came out, I wanted to love it. I thought, finally Microsoft get it! They are designing Metro to work with the cloud, the phone, tablets, and the PC. All my information will be in sync!

Then I get Windows 8 installed and see that the included apps for contacts, calendar, and photos are a joke. To this day, they are still a joke.

Why can I not upload my own picture for my contacts? I can do it on Windows phone, but not on the PC with Metro. There are several other fields that are missing from contacts. Why can I not enter my own?

I have several Windows PC and several Macs in my family of 5. All we do on the PCs these days is play games that we cannot play on the Macs. We also use the PCs when we cannot get on the Macs because someone else is using them.

So, can someone please tell me if this is possible with Windows 8, Surface, and Windows Phone:

My wife and I have iPhones and iPads. My kids have iPod Touches and/or iPads. We have an iMac as our main PC. We use my iTunes account as the Main account on all devices.

My wife and I share our contacts and calendar information. When she makes a change on her phone to contacts or calendar, I get it on my phone within seconds. It also goes to our Macs and iPads. When I purchase an App it is available to play on all phones and iPads. My kids are able to keep their own contacts and calendars, We can all have our own iChat and Facetime IDs. Everything just works the way it should and it is EASY to setup.

This is the kind of thing I need Windows to do... I have tried and I can't make this work. Heck, it is a pain in the neck just to get Windows 8 Apps I purchase on 1 computer to be available for all accounts on that computer! On the Mac, I purchase the App, it installs, and is available to all accounts. On the PC, I purchase the App it installs, then I have to log onto each account, log myself into the store, install the app, log myself out of the store and log the account holder back in... I have to do that for each account! Come on!

And while I am on a rant... MS wants us to Subscribe to Office now. $99 per year. They say that one of the benefits to this is that we will get all the updates to office and that they will be updating it more frequently. Isn't that they same thing they said about the Windows Live apps? When was the last time we got a significant update to Photo Gallery and Movie Maker??? I thought they removed them from windows so they could update them independently and frequently??? And we are supposed to trust MS on Office?

Well... I should stop. I sound like an Apple fanboy and/or a troll. Honestly I want to see MS get better... I would love for MS to knock apple down a peg or two, so then Apple will get better... I don't care about these companies personally... I just use the best tool for the job. For my family right now... It is Apple. Maybe MS gets their act together with Blue and Apple does nothing with the next version of OSX and iOS7... Ugg.

I hope you are not annoyed at the people asking you that. It`s kind of silly as Boston is a pretty big city, but I think its a very human thing to reduce a city down to the one resident you know (even if you only know them through their writing).

Paul, you worry me. Basic numeracy in the US is in decline, and I would have thought that it might be one of your stronger points. Computers after all are based on numbers and math. Instead you stand out as a sad example of how far our skills have fallen.

A share price is utterly irrelevant without any context of how many shares are issued, and what the price is relative to its revenue and profits.

Somehow you would have us believe that $400 is the correct price for Apple, and not $700, based on what?

Simple arithmetic operations called multiplication and division give us a better sense of what a share price means.Many web sites, including Google Finance and Yahoo Finance (I'm sure Microsoft has such a site too), will even do the math for you! Aren't they kind!

The price to earnings ratio is the measure used to see relative worth between companies who varying number of shares and earnings.

As of this writing AAPL's price to earnings ration is 9.0. The current S&P 500 average is just under 18. At Apple's highest valuation P/E was only 16, under the current S&P. The historic high for Apple's P/E and was before 2008, just under 40, but as Apple has become more and more profitable, the most profitable in the world, its P/E has declined for the most part.

By comparison GOOG is currently at a P/E of 24, and Amazon has no P/E because it is a not-for-profit venture. :D Even Dell, that company in permanent decline towards irrelevance currently has a P/E higher than Apple's at just under 10. Isn't that sweet?!

So shame on you Paul for propagating innumeracy. And for the readers of Paul I encourage you to embrace multiplication and division. They are not hard, and as a part of math, they are some of the most useful tools for actually comprehending the world instead of blindly bumping into it.

Every word of this is true, Paul promotes innumeracy, in addition to fascism, Windows, and bad dental hygiene. I once saw him steal a poor little child's abacus and toothbrush. And then he installed Windows 8 on her Macbook.

Agree on point about condescension. Also agree MS might have finally gotten the message on the start button. Companies should listen when possible or not be surprised when customers go elsewhere. Nokia comes immediately to mind.

I think you give way too much credit to Microsoft for all it's "me too" innovations. Microsoft still doesn't have a competitive smart phone, laptop, or tablet. They are still peddling the same easily busted OS's and Office suites from yester-year. the the XBox has been a waste of time financially.

Apple had the iPod, the MacBook Pro, the iPhone, the MacBook Air, and the iPad. If I had to bet on one company moving forward with "true" innovations, my money would have to be on Apple.

You're right. The emphasis on a stock price, with no other context, like market cap or P/E, is pretty pointless. Like using marketshare as the only metric for a company, it is a limited measure.

I've followed Apple from the glory days of the original Mac, the era when the name of the company seemed to be "Beleaguered Apple", through the walk-on-water era of SJ's last years, so the gyrations of the stock market are things that come and go, as is the affection of the press.

"That search was even more useful in Win8." It has one serious problem. It can't find any saved favorite websites even if they were put in the Favorites folder using IE. Fortunately, File Explorer search box can still find anything on the hard drive. But the old start button search used to have the same capability to find everything, including Favorite websites.

Well, since perhaps my heavy-handed irony did not convey my point (and, no, I don't actually believe that Paul doesn't know math or is promoting innumeracy), let me state my point more directly.

The premise that Apple was overvalued at $700 ("stratospheric") and that at $400 ("rarified") it is somewhat less overvalued is false. Apple has been below average valuation even as it's price has been high.

The reason for this is that the P/E compared to the S&P 500 was and is below average. Stratospheric is Amazon's price, when they make no profit. Of course other premises for valuation may come into play, but they are less concrete.

The rhetorical point that Paul was making about analysts finally realizing Apple not being innovative and were finally overvaluing it less hinges on the reader accepting that $700 was a high price for the part of the company it buys you.

But the value as opposed to the price of the share you are buying is only relative to the company's revenue or earnings, and the number of outstanding shares. This is a basic mistake that is repeated over and over again in the financial press, even by so-called analysts. Having worked in the financial information industry, I can't say I have much respect for analysts.

So Paul's rhetorical point is false. However, irreverent you want to be, I would hope your point at least hews closer to the truth.

The underlying point that Paul was making about innovation via a false observation about valuation is up for grabs. These days in the technical press novelty is mistaken for innovation. Let's face it, a site like Gizmodo or Engadget depend on a steady stream of novelty to write throw-away articles about for clicks.

You can create new things at will, but I take innovation to be something new with lasting value. Valuable new things are rare. I see the novelty factor in many of Apple's competitors, but am far less convinced of their lasting value; I am more convinced when Apple tries to do a few things well (though not always successfully); but then they run the risk of not producing a steady stream of distracting novelties for the press to run stories on. TechCrunch is the unending stream of useless novelty related to first-world problems with a few bright shining stars of innovation with global impact.

As someone who uses Windows for work (and like C# and Visual Studio a lot) but Linux for the heavy lifting (open source frameworks are tremendous for many classes of difficult problems), and use a Mac at home, I can be fairly said to straddle different platforms. Having tried Window 8 I can safely say I have no use for it since the imposition of the new start screen would hamper my workflow. This is a useless innovation in relation to my work, especially when I am not about to reach out to touch my dual monitors to interact with my screen. It doesn't help me in any way with my work. Maybe it works for others, but not for me.

However, I still personally recommend everyone who asks me to stay away from Windows 8 and stick with 7, because I don't think the mixing of touch and desktop interactions has much value. If Microsoft fixes 8 in the ways suggested by the rumours, I may reconsider for myself, but honestly have no idea what else 8 offers that would help me. I also feel that new versions of things like Office and Windows and other operating systems are offering significantly diminishing returns.

I am also less sold on the new visual language of Windows. I feel it is some sort of trendy conceptual word art, and I usually only have contempt for that. Notice I said trendy, so yes, I don't think this is novelty with lasting power.

In general what I have observed of the visual language (aka. Metro) is that it significantly reduces the information density of the screen. I suppose some think this is a win, but as someone who has nodded my headed at Edward Tufte's analysis of information display, a reduction in information density seems a dumbing down to me, and purely from the point of view of my workflow I usually want greater density to grasp the whole better. Sparklines (a Tufte innovation, I believe) in Excel were a great win for me when analyzing long series of data.

Finally, as a developer who has been through the treadmill of Microsoft technology "innovations" so many times, I have lost trust in their technology du jour. Today it is RT, yesterday it was Silverlight or WPF, before then it was ActiveX. I think that Microsoft has lost a lot of developer good will as a result.

I am just thankful that .NET itself is solid and is being steadily improved and can be depended upon. I am thankful for LINQ and lambdas on a daily basis. These are innovations, innovations that of course descend from the academic world into the commercial world, but worthy innovations nonetheless. Java is still struggling to get lambdas out the door, and now I read it will be in 2014. Parallel Linq holds promise too as an innovation, but I haven't been able to put it to use yet.

To summarize, I think Apple innovates and does so sparingly, because that is the nature of innovation: it is rare. I think some of the things that Microsoft has done is innovation, but not in the recent versions of their UI, which I see as merely trendy and without great value.

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As a resident of Cambridge, of course I am wanted to see the whole lockdown end. Being cooped up all day made me grumpy :D (Could you tell?) Glad to see a peaceful end. Still sleepless though.